Analysis: Liability claims against operators doubled since 1996

The number of liability claims against long-term care operators has doubled since 1996, with the severity of claims tripling during the same time frame, according to an industry-backed study. In addition, general liability and professional liability (GL/PL) costs for providers have soared 182% since 1996, study results show.

The analysis also found that annual resident liability costs for occupied long-term care beds rocketed from $430 in 1993 to $2,310 in 2004. It was conducted by Aon Corporation and commissioned by the American Health Care Association.

"Following trends initially observed in Florida and Texas, an alarming number of states are experiencing dramatic increases for GL/PL coverages," said Theresa Bourdon, managing director and actuary at Aon.

The study encompassed 23% of the total number of long-term care beds in the country, most of them in the skilled-nursing sector, with information provided by 76 providers. The states that had the worst liability cost problems were Arkansas, Mississippi, California, Georgia, Alabama, Arizona and Tennessee.

Texas, however, which passed tort reform in 2003 and strengthened it with a constitutional amendment, appears to have had the best success among the states analyzed. GL/PL loss costs there fell to nearly one-half ($3,390 in 2004) of peak levels ($6,720) just two years earlier.

The Aon study showed that the number of claims more than doubled from 1996 to 2004 -- from 6.2 per occupied 1,000 beds in 1996 to 13.1 in 2004. The average cost per claim rose to nearly $180,000.

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